With the arrival of the two big shopping days, Black Friday and Cyber Monday, American sellers are gearing up for the most important time of the year. However, it also comes with high risks: for some companies, the holiday shopping season accounts for 50% of their annual revenue. According to our latest research, economic uncertainty and recent inflation are likely to impact consumers' willingness to spend on the holidays. In the second year of back-to-back surveys, we looked at the holiday shopping plans of more than 500 Americans. The results of the study reveal the confusion of consumers: they crave discounts, want to shop as much as they want, but at the same time feel the pressure of constant ****.
Consumers are starting to be cautiously optimistic about the season.
When it comes to Black Friday and Cyber Monday, about two-thirds of respondents believe that this year's discounts will be as good or even better than last year's, compared to 56% in 2022. This is in line with market research firm Adobe Analytics, which is set to see record discounts this year. On Black Friday and Cyber Monday, shoppers are also ready to indulge. Since 2022, the proportion of the population prioritizing the purchase of necessities has decreased slightly, while the proportion of the population intending to splurge on luxury goods has risen slightly. At the same time, spending on important high-cost items remains stable at 15%.
Despite the slight occurrence, these findings are still troubling for sellers. That's because historically, during Black Friday and Cyber Monday, items have been the top three categories of items consumers consume, with 15% of items being on the lower end of the spectrum. Similar to 2022, the majority of consumers we surveyed were around 682% intend to shop online. Less than 11% of respondents in our survey said they plan to shop in-store this Black Friday, suggesting that the number of visitors to the mall may decrease.
But they still behave like a recession.
Last year, despite the positive economic outlook, our research found that consumers were becoming more frugal and exhibiting behaviors that were common during economic crises. This year, inflation-plagued consumers intend to adopt a similar strategy. The main concerns for customers remain high prices and inflation, as about 90% of our survey participants said these issues will have an impact on their holiday shopping. On average, they plan to spend about $665 on gifts this holiday shopping season, $35 less than last year and significantly lower than the American Retail Federation's 10-year average of $826.
On a more positive note, the percentage of people who said they would be willing to "spend a little less" or "a lot less" than the previous year has dropped to 24 this year2%, a significant decrease of 10 percentage points from 2022. Although nearly 39% of respondents claimed that their spending was "about the same", this effectively meant spending less, given inflation. At the same time, shoppers seem to be more diligent in their budget planning than ever before. Customers have told us that they plan to employ a variety of strategies to manage their spending, such as adhering to a strict shopping list, starting shopping early in advance so that their spending can be distributed over time.
However, there is still a silver lining for retailers: despite consumers' plans to cut back on spending this year, there is growing interest in brand names and taller gifts, which is often accompanied by higher profit margins. A notable change since 2022 is that more consumers now trust retailers to deliver "great value". This suggests that when consumers seek the best** and affordable options, they are not necessarily looking for cheap products. In times of economic uncertainty, consumers aim to stay in control of their spending. Therefore, it is not surprising that almost 50% of respondents mentioned that they would use the money saved to pay for their holiday expenses. A similar percentage said they plan to use a credit card.
However, despite the widespread adoption of the "buy now, pay later" option by major retailers, this option has remained stable at around 15%. This means that although these alternatives are more accessible to consumers, those who keep an eye on their budget may avoid them. Our research contributes to the uncertain outlook for this year's holiday retail season. Different organizations and economic analysts have come up with contradictory theories. Some of them expect holiday spending to return to pre-pandemic scenarios, while others expect consumers to remain cautious.
Retailers' attitudes to the holiday season vary. Amazon seems to be very optimistic, significantly increasing seasonal hiring, while FedEx and Target are more pessimistic. This difference is in line with the broader economic context. This is despite the relatively low unemployment rate in the United States, which is 39%, but more than half of survey participants expressed concerns about job stability, and about a third said they felt "moderate" or "severe" worries. Only 13% said they had no financial problems at all.
Amid ongoing economic uncertainty in the U.S., consumers are still sticking to their shopping Xi, reminiscent of the recession this holiday season. This underscores the importance of retailers prioritizing real value. In the current uncertain U.S. economy, people stick to their shopping behavior this holiday season, which is often associated with economic downturns. This means that retailers should be mindful of providing real value to their customers.
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